Global Economics

In Thailand, It's Crippling Déjà vu All Over Again

Protesters head to a government complex in Bangkok, Thailand, on Nov. 27, 2013, the third day of demonstrations to seize government ministries and agencies

As November brings relieving, cool weather to steamy Bangkok, protestors are massing at intersections throughout the city, chanting slogans opposing Thaksin Shinawatra, the de facto head of the party running Parliament, and calling for the government to fall. Groups of demonstrators, clothed in t-shirts reading “Get Out! [Thaksin]” have taken over critical infrastructure in Bangkok and are threatening to commandeer more parts of the city. The military is on edge and foreign embassies have issued warnings to their citizens. Meanwhile, in the U.S., the president-elect, Barack Obama, has just begun making up his cabinet.

Wait … that guy Obama isn’t president-elect anymore. Indeed, the above scene from Bangkok took place in 2008, when a group of mostly middle-class protestors opposed to a pro-Thaksin party running the Thai government seized control of Bangkok’s main international airport and other places around the city, paralyzing commerce and policy-making and ultimately leading to the government’s collapse.

To the protestors’ delight, the government was replaced—without an election—by a new parliamentary coalition featuring the Democrat Party, mainly supported by urban, middle-class, royalist Thais. Two years later, Bangkok was swarming with protestors again, and by 2011 a pro-Thaksin party had won control of Parliament once more.

This week, Thailand seems to be repeating the events of 2008 almost to the exact detail. Demonstrators have seized several government ministries and vowed to paralyze the country until the elected, pro-Thaksin government run by Yingluck Shinawatra, sister of the former prime minister, falls or is ousted. As of yet, Yingluck’s government has not collapsed or been forced out office by a military coup, as her brother was in 2006; Thaksin fled into exile and calls his sister and other party leaders constantly.

In the coming weeks, Thailand’s political crisis is likely to escalate, not de-escalate, ultimately resulting in either a snap election or some kind of extraconstitutional removal of the government. In other words, more political tension with little resolution, a carbon copy of Thai politics going all the way back to 2001, when the populist telecommunications tycoon Thaksin was first elected premier.

For many outsiders—and even some Thais—the continuing, unresolved political cycle seems mysterious. Though the country is not growing as fast as it was in the 1980s and early 1990s, when it topped global growth charts, it remains one of the world’s strongest-growing economies. Thailand’s auto-manufacturing sector now produces nearly 3 million vehicles annually, up from around 400,000 a decade ago, and the country boasts world-class industries that range from optical disk drives and aquaculture to tourism and design. It has a relatively free media and a large middle class, and its cities have reached the level of per capita income that, according to most scholars, normally fosters democratic stability.

Yet Thailand seems unable to achieve democratic stability. Opponents of the government claim that, were Thaksin and his allegedly corrupt and lawless family removed from the political equation, Thailand would return to placid happiness. There is some truth to those allegations. As premier, Thaksin paid little heed to the rule of law, allowing the security forces to essentially shoot people on sight as he crushed independent agencies and media. He was found guilty of corruption by a Thai court in 2008, although he claims the charges were politically motivated.

Still, Thaksin and the party he founded have remained enormously popular with the majority of rural Thais, who make up the largest portion of the population. Iterations of Thaksin’s party have won every election in Thailand since 2001, even without him leading the ticket. The party was the first in Thai history to cater to rural voters, propose clear policy platforms, and deliver strategies designed to reduce inequality in one of the most unequal societies in Asia.

At the heart of Thailand’s paralysis is the fact that the country, known in archetypes as smiling and accommodating, has leaders who have become perhaps the most uncompromising democratic politicians in the world. Thaksin’s opponents in the Democrat Party don’t just battle him and his ideas at the polls—they refuse to accept that his support among voters could be real and they try to eradicate him and his party. Thaksin and his top allies, meanwhile, also have proven staggeringly uncompromising. Despite little public appetite for an amnesty law that would have allowed Thaksin to return to Thailand while waiving his corruption charges, Yingluck’s government tried to ram the legislation through this fall, a move that was the initial trigger for street protests.

In addition, Thailand demonstrates a phenomenon once thought impossible, but which has become increasingly common in developing nations: a middle class that has become alienated from democracy. Many of the same people now demonstrating against the Thai government are the men and women who, in the 1970s and 1980s, led street protests against actual military-backed authoritarian governments. Yet as their street protests worked, bringing democracy in the 1990s and 2000s, these middle-class Bangkokians became increasingly dissatisfied with the result.

Extending the franchise allowed poor, rural Thais to make or break elections, depriving Bangkokians of some of their power and prestige. Many well-meaning, middle-class Thais have been disgusted to watch elected Thai leaders use majorities in Parliament to trample minority rights and allow the decentralization of political power to seemingly cause even more graft—or at least, decentralized graft.

The middle-class solution, increasingly, has been to call for a return to technocratic and/or army rule. This scenario has been repeated, over and over, in other developing nations, though not in ones as wealthy and otherwise stable as Thailand. Think of Egypt, where liberals—tired of the Muslim Brotherhood and willing to disenfranchise poor, rural voters—celebrated the army’s takeover.

Just as in 2008 and 2006, the protests in Bangkok are likely to have a severe impact on the Thai economy—and by extension, effects on the region and the world because Thailand is the second-largest economy in Southeast Asia. Tourism arrivals could plummet this winter, the high season for one of the biggest tourism destinations in the world. If, as the protestors want, demonstrations spread across the country, they are likely to block roads and possibly airports. That could make transport more challenging and potentially shut down industrial estates north and east of the capital, centers of global auto manufacturing and electronics manufacturing for the biggest multinationals. The Thai Commerce Ministry already has predicted that the turbulence will cause Thai exports to shrink this year, cutting percentage points off growth.

More worrisome for Thailand’s long-term economic potential, the demonstrations are likely to foster more and more populist policies in a country already running massive debts. In response to the demonstrations, the Yingluck government well may launch a new round of government handouts to please its core supporters and win over undecided Thais. The government already has initiated policies to subsidize the rice industry and fund massive new infrastructure programs, resulting in less interest in Thai bonds and greater public debt.

Even if the demonstrations lead to Yingluck’s ouster, the opposition Democrats probably would pursue populist strategies, too, since they know that winning an election will take greater support from poor, rural Thais. In the run-up to the 2011 elections (which the Democrats lost), the party initiated its own massive round of hand-outs. Though Thailand’s economy generally has weathered crisis after crisis going back to the early 2000s, it may be nearing the end of its many lives.